The Total EAM Vision Strategic Advantages in Asset Management

Written By: Daryl Mather

Published: June 27 2003

The
Total EAM Vision Strategic Advantages in Asset Management

Featured
Author - Daryl
Mather
- June 27, 2003

Defining EAM

Enterprise
Asset Management systems (EAM) continue to
point the way into the future for capital intensive industries. The combination
of functionalities, asset focussed business intelligence and advanced management
consulting have allowed some vendors to provide consistently high results to
those industries whose operating model involves the management of large numbers
of physical assets.

This
specifically refers to industries in the areas of Mining, Oil and Gas, Defense,
Utilities and Transport although it does also offer positive benefits for companies
in some areas of manufacturing.

The
focus and structure of an EAM system recognises the strategic
importance of asset management and provides a structure and depth of functionality
dedicated to providing clear strategic advantages in these areas. It is for
this reason that it is directed at the central role played by maintenance and
includes the three additional functional areas in capital intensive industries
that have a synergistic relationship with asset management. They have truly
evolved into solutions for enterprise performance management in this industry
sector.

It
represents a key strategy to increase plant capacity, using information technology
in lieu of new construction in large, asset-intensive enterprises. It integrates
key plant control systems (PCS) and ERP with maintenance activities and functions
to reduce downtime and minimize maintenance spending

Confusion
in E.A.M

The
emergence of EAM as the solution for this style of industry has at times been
confused both by clients, as well as by vendors.

Myth
1: EAM are only transactional Systems

While
there are lower standard systems that offer only transactional functionality,
a true EAM system builds on this data by providing advanced functions in critical
areas affecting asset management. For example:

It
is the inclusion of these ranges of functions that EAM systems are able to provide
strategic advantages in asset management. Advantages that can separate industry
leaders from their competitors.

Myth
2: Misunderstanding of the Areas of EAM

A
common ploy by vendors of lower quality systems is to attempt to include other
functions as a part of the core functionality of these systems. This effort
of re-branding by specific vendors is not only misleading but affects the overall
goals of asset management in industry. For example:

Addition of CRM (Customer / Client Relationship Management)

Addition of SCM (Supply Chain Management)

While
these two system functionalities are important parts of managing enterprises.,
they are not vital parts of asset focussed industries. In fact the use of these
systems, functions, in lieu of basic EAM functionalities, can substantially
reduce benefits from the overall asset-centric solution. (Note: Basic CRM is
considered to be a part of EAM)

An
EAM provides a means of generating strategic advantages through
the management of physical assets. And uses the issues of Asset Management as
key drivers for achieving these advantages.

"Fast
ROI and Hard Savings Keep the EAM/CMMS Software Market Healthy...The recent
success of Enterprise Asset Management (EAM)/ Computerized Maintenance Management
System (CMMS) solutions is directly related to strong corporate concentration
on profitability. EAM/CMMS solutions are the only ones where a substantial and
quick ROI can be realized."

This
underscores the ability of these style systems to produce rapid results through
advanced physical asset management functionality. The strategic importance of
this, in terms of financial and non-financial returns on investment, cannot
be overlooked by companies with large asset bases.

The Changing Asset Management Environment

For
a corporation to understand the potential impact of EAM it first needs to understand
the strategic importance of asset management. The management of physical assets
offers a vast area of potential strategic advantage for many companies. A thorough
and accurate approach in this area can bring benefits in the areas of:

Productivity

Risk Management

Asset utilization

Quality of product and of client service

When
combined with the added benefits available in applying EAM systems this adds
potential areas of strategic advantage in:

Utilization and development of human resources

Financial optimization of the maintenance function

Reduced inventory holdings

Better vendor selection and management

Human Capital Management

This
requires a truly proactive approach to asset management. An approach that involve
looking forward to take decisions instead of looking back. Proactivity, when
expressed in terms of EAM, means:

Use of "what if scenarios" and forecasting. This is a vastly under used area
of all implementations. The ability of a company to be able to forecast differing
scenarios when analysing the asset management function can add substantial
value to a company.

Accommodation of RCM style analyses

Extensive use of Business Intelligence as a strategic asset for managers

Providing for the creation of asset specific decision support information
tools

It
does not merely mean reacting to analysis. This practice, although recommended,
is a reactive practice and focuses on what has happened. The
key to proactivity is in focussing on what could happen in
the future and planning accordingly.

Non Financial ROI

An
understanding of the strategic importance of asset management requires an appreciation
of the non-financial benefits and responsibilities of physical asset management.
These are primarily in the areas of risk management associated with safety and
reducing the risk of damaging the environment.

Changes
to industrial legislation and community expectations have made these areas some
of the more critically important to directors of companies. At this point in
time the government of England and the United Kingdom is discussing efforts
to bring in legislation regarding "Corporate Killing" via negligence in asset
management. These trends are set to continue throughout the world.

The Total EAM Vision

The
Total EAM vision is one that encompasses all of the areas importance
to management of maintenance. Far from just transactional management a strong
solution builds strategic advantage in each of the following areas.

Advanced
Asset Functionality
The following are some of the functional areas where a Total EAM Vision can
provide substantial benefits:

Whole of life asset care (From purchasing to retirement)

Advanced management of Predictive maintenance regimes

Advanced PM management (Far beyond "do this now" style functions)

Advanced workforce planning both long range and short range. Particularly
in terms of "capacity scheduling" and "shutdown management"

Abilities for the management of Human Capital

Decision support for maintenance strategy decisions

EAM style inventory management algorithms (based on probability- "just-in-case"
in place of "just-in-time")

Comparative life evaluations for equipment under condition monitoring regimes.
This is a key strategic function of a base EAM system and one that contributes
greatly to decisions regarding capital investment.

Risk and Reliability Management Functionality

RCM (Reliability Centred Maintenance) functionality

Support of root cause analysis

Vendor selection and evaluation

EAM style inventory recalculation functionality

Early identification of reliability issues in equipment

Business intelligence and Analytics
The use of business intelligence is a means of extending EAM
systems in order to accommodate the Total requirements of capital intensive
industries.

This
has been a part of the solutions EAM providers have offered
for the past decade and, importantly, works from the information already contained
in the EAM system.

Provision of key performance indicator monitoring in a manner that allows
their use as a means of implementing strategy, not only monitoring it and
reacting. (Truly proactive)

Application of "what if" scenarios and forecasting

Executive alarms and drill down functionality

Provision of reliability analysis information.

Provision of analytical decision support information.

Advanced Management Consultancy The last step in
the application of the Total EAM Vision is that of the provision of Managerial
Consultancy. This goes way beyond the standard implementation function of EAM
vendors and needs to include a high level approach to optimizing a companies
processes based on:

Acknowledged best practices

Knowledge of areas of critical importance in the industry sector

The interrelation between functional areas for greater ROI achievement

While there is no doubt regarding the ability of EAM systems
to achieve results, this can be greatly leveraged via focussed management consultancy.
Particularly with respect to the correct usage of powerful "what if"
functionality, risk and reliability management, advanced inventory management
and the creation of a structured KPI regime.

The Total EAM Solution

A
Total Solution T
here are many solutions on the market today that cover some or all of these
requirements in an adequate manner. The matrix below is based on the Mincom
International offering, Ellipse, a Total EAM Solution for capital
intensive industries. As can be seen the functions of this system are directed
at delivering the Total EAM Solution for clients.

Enterprise
Asset Management Solutions Grid Overview

Managerial
Consultancy

Total
EAM Suite

EAM

Whole
of Life Asset Care

x

.

X

Maintenance
Administration

x

.

X

Predictive
Maintenance

x

.

X

Maintenance
Decision Support *

x

.

X

Transactional
Information

x

.

.

Physical
Asset Risk Management

x

.

X

Advanced
Human Resource Management

x

X

Advanced
Inventory Management for Asset Intensive Industries

x

x

X

Reliability-centred
Maintenance

x

x

X

Root
Cause Analysis

x

x

X

Financial
Cost / Life Analysis

x

x

.

Technical
Change Management

x

.

X

KPI
Dashboard

.

x

.

Strategic
Indicator Usage

.

x

.

Strategic
Planning for Asset Management

.

x

X

One
of the additional elements of the chart above not mentioned in this paper is
that of Technical Change management. Or the management of modifications, new
acquisitions, capital projects and other improvement projects. When considering
the overall asset management picture this element is one of the key elements
and essential to responsible asset management.

It
is worthy of noting that the no software system alone is capable
of achieving all of the goals of EAM in any industry. The same
can be said of ERP or of CMMS. They are generally a collection of applications
that support the EAM. Such as reporting systems, graphic parts manuals and other
peripheral systems.

Conclusion

Physical
asset management contributes greatly to the achievement of competitive advantages
in capital intensive companies. Particularly in the areas of productivity, quality,
cost effectiveness, and risk management. If your company has a need to manage
physical assets it can benefit from a proven Total EAM solution
provided by one of the top-level systems vendors.

A
key issue however in the selection and implementation of an EAM
system is ensuring that the underlying processes and management functions support
the goals of achieving strategic advantages in Asset Management. This goes beyond
the implementation project and should include a degree of true managerial consultancy
assistance to truly provide a quantum leap in corporate performance.

About
the Author

Daryl
Mather is a management consultant, author and conference speaker specialising
in the development of strategic advantages in maintenance and reliability. After
beginning his career in the mining and oil and gas sectors of Australia he has
enjoyed a career in every continent and over 15 different countries around the
world. He is the author of CMMS: A Timesaving Implementation Process
and runs a Spanish language maintenance information website. He currently works
as a management consultant in England.